(Reuters) – Shares of electric vehicle maker Nio Inc reversed course to trade lower on Friday after short-seller Citron Research recommended investors to sell the stock, citing pricing pressure posed by bigger rival Tesla Inc in the Chinese market.
“Anyone buying NIO stock now is not buying a company or its prospects, rather you are buying 3 letters that move on a screen,” Citron said in the note.
Nio did not respond to a request for comment.
Tesla has cut prices in China on several occasions, aiming to gain more market share in the world’s biggest car market.
Currently, China-made Model Y has an estimated price of 488,000 yuan ($73,895) in the country, according to Tesla’s website.
Citron assigned a $25 price target on the Nio stock on Friday, implying a 48% downside to its last closing price.
The stock rose as much as 12.2% earlier in the session after upbeat quarterly results from peer Li Auto. Nio, which has risen more than 12-fold this year, was down nearly 1% at $47.79 in late morning trade.
Short sellers, who have bet that Nio’s stock price will fall, have logged $3.5 billion in mark-to-market losses this year, according to S3 Partners.
(Reporting by Ayanti Bera and Munsif Vengattil; Editing by Maju Samuel)